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How to Start Your Own Business

The Ins and Outs of Starting a Business

Starting your own business can be a lot like becoming a parent. You can also expect it to take a great deal of your time before it is mature enough to function without constant oversight. The good news is that when your business succeeds you will find the rewards are worth the trouble.

Develop a Business Plan

A well thought out business plan is one of the most important ways to make your business among those that succeed. A business plan serves as a road map. It defines your business goals and generally contains a three-to-five-year projection describing how you plan to make money. Without it, it would be difficult if not impossible to obtain the financing you’ll need to start your business.

Business plan basics include an executive summary or snapshot of your proposed business; a description of how the company will be organized; a market analysis detailing your product, competition and how you will sell your product; and a ul outlining the financing you will need to get started, as well as how and when you will be able to pay it back.

Sound daunting? There are plenty of resources to turn to for help. Many local Chambers of Commerce offer help writing business plans, or they can direct you to an instructional course to attend at a minimal cost. Small business incubators and economic development corporations are also useful resources for information. They are, after all, in the business of encouraging economic development through entrepreneurship. You can find a listing of helpful resources at the end of this article.

Legal Structure

One of the first decisions that you will have to make as a business owner is how your business should be structured. There is no one legal entity that best fits every business. You could decide to start as a sole proprietor, partnership, limited liability entity, or corporation. Learn about the different types of business structures on the U.S. Small Business Administration (SBA) website. You also may want to seek professional advice about liability and tax ramifications.

Licenses and Permits

It is possible you will need federal or state licenses or permits to run your business. If you are opening a restaurant and plan to sell alcohol, for example, you will need a license. If you are opening a gift shop, you will need a sales tax license or permit. If you want to open a hair dressing salon, you will need a professional license to work as a stylist. Even some home-based businesses need permits or licenses — day care facilities for children are good examples. Once again, you can turn to the SBA to start researching license and permit requirements.

Location, Location, Location

Location can make or break a business. Be sure to check with your local zoning authorities when selecting a location to make sure you are allowed to conduct business at the site you have selected. This applies even if you plan to run a business out of your home. Most businesses choose a location that provides exposure to customers. It’s also a good idea to talk with business owners already in the area.

The SBA recommends considering the following factors when choosing your business location:

  • Brand Image — Is the location consistent with the image you want to maintain?
  • Competition — Are the businesses around you complementary or competing?
  • Local Labor Market — Does the area have potential employees? What will their commute be like?
  • Plan for Future Growth — If you anticipate further growth, look for a building that has extra space should you need it.
  • Proximity to Suppliers — They need to be able to find you easily as well.
  • Safety — Consider the crime rate. Will employees feel safe alone in the building or walking to their vehicles?

Your local economic development organizations are a good source for information about shovel-ready sites and tax incentives that may apply.

Build Your Team

Know yourself! Identify your personal strengths and weaknesses and build a strong team of support professionals which in many cases include:

Family and Friends

This may be the initial source of your first sales which could give you a quick source of revenue. More importantly this is your emotional support team when you are dedicating long hours to your new venture.


For some business owners keeping accurate financial records is daunting, however, it is the most important aspect of making money and obtaining financing. There are many affordable professionals that can help you maintain good financial records.


Enlisting a lawyer will help you to know the limits of liability you may be faced with in your new business. Building a relationship early on will establish a long-term relationship that will help you protect your business interests.

Insurance Agent

The insurance agent is important in protecting your assets and insuring you from legal ramifications. There are many types of business insurance policies available to cover all of your specific needs.

Financial institution

Many financial institutions have business advisors to serve you. The advisor can help you understand the processes involved in obtaining money. There are many financial institutions to work with and they all have different tolerance levels in business lending.


If you will have employees, outline your management team structure and define the skill sets you will need to assure that you have the internal support to conduct your business activities.

Finance Your Business

Your business plan should include what your start-up costs will be and your ongoing cash requirements. It is crucial to focus on the money aspect in your plan. Plan in hand, it is time to approach prospective lenders. There are several ways to finance your business, including traditional loans, government-backed loans, personal savings and investors.

Traditional loans give the borrower more freedom in determining how to use the money. A financial lending institution will take a close look at the applicant’s history. Sometimes smaller financial institutions have personal relationships with their members or customers that allow them to consider additional factors when making a loan.

With government-backed SBA loans the government isn't directly lending money but setting guidelines for loans made by credit unions and banks, economic development organizations and micro lending institutions. SBA loans come with a government guaranty, typically covering 75-90 percent of the loan, which make it possible for a financial institution to extend a loan that it might otherwise decline. Two types of SBA loans are most commonly used for starting a business.

7(a) Loan Program is the SBA's primary lending program to help startups obtain financing. 7(a) loans are the most basic, common and flexible type of loan. They can be used for a variety of general business purposes, including working capital, machinery and equipment, furniture and fixtures, purchase or renovation of land and buildings, leasehold improvements and debt refinancing.

CDC/504 Loan Program provides businesses with long-term fixed-rate financing for major assets, such as land and buildings. The loans are typically structured with the SBA providing 40 percent of the total project costs, a participating lender covering up to 50 percent and the borrower putting up the remaining 10 percent. Funds from a 504 loan can be used to purchase existing buildings, land or long-term machinery; to construct or renovate facilities; or to refinance debt in connection with an expansion of the business.

United has loan experts ready to get you started. To discuss financing a small business in detail, contact any Commercial Loan Officer at United Federal Credit Union.

Further Resources

For more details about funding sources available, go to Small Business Lending Fund (U.S. Treasury) or click here to learn more details about SBA loans.

For information about writing a business plan, select your state to see the number of organizations available. They are all in the business of helping you succeed at business!